0% or 15% Down - Hard Money

[Sam Rust]

I'm getting into fix and flip here in the greater Denver area and have connected with several hard money lenders and wholesalers. Currently I have two paths open to me, I would welcome input! Currently I have $35k in cash in the bank and am 3 years into a 15 yr, 3.625% on my primary residence with about $230k in equity.

Scenario #1

Refinance my primary into a 30 yr and pull out an additional $145k in cash to use for the venture. I'm working on getting quotes, but I have excellent credit and anticipate a rate near 4%. I have spoken with several groups, the best deal so far is 11% interest, 2 points, 15% down, 1 year term. I'd be looking at houses in the $350-450 range, buying near 70% ARV.

Scenario #2

Use a 100% rehab loan, and leave my current loan in place on the primary. Best deal I've found so far is 15%, 4 points, with 9 month balloons and interest only payments. I'd be looking at very similar acquisitions, but would be forced to only look at dealsI can buy at or below 70% ARV.

I lean towards scenario #1, both the lower cost and the fact I'm taking action by refinancing appeal to me. It also seems a bit less risky as my cash reserves would be significantly higher. On the other hand, I can get into the game quicker, and with no money down in scenario #2.

Any thoughts would be appreciated!